U.S. 3-month

U.S. 2-year

U.S. 10-year

Oil companies are hitting the brakes on a US shale land grab that
produced an abundance of cheap natural gas, & troubles for the
industry. The spending slowdown by intl companies comes amid a series of write-downs of oil & gas shale assets, caused
by plunging prices & disappointing wells. The companies are turning
instead to developing current projects, unable to justify buying more
property while fields bought during the 2009-2012 flurry remain below
their purchase price. The deal-making slump, which may last for years, threatens to slow
oil & gas production growth as companies that built up debt during the
rush for shale acreage can’t depend on asset sales to fund drilling
programs. The decline has pushed acquisitions of North American energy
assets in H1 to the lowest since 2004. North American oil & gas deals,
including shale assets, plunged 52% to $26B in H1 from $54B in the year-ago period. During the drilling frenzy of 2009-2012,
energy companies spent more than $461B buying North American oil & gas properties. Prior to
this year, oil & gas transactions ranked among the top 2 in total
deal values every year since 2005, except 2008 when they were 4th. So
far this year, oil & gas isn’t among the top 5. The land
grab began more than a decade ago when improved drilling methods & a
process called hydraulic fracturing, which cracks rock deep underground
to release oil & natural gas, opened up new production in previously
untappable shale fields. The rush accelerated in 2004 as more shale fields in North Dakota, Pennsylvania & Ohio were identified, opening new troves of petroleum & the prospect of energy independence in North America. As
overseas buyers moved in, booming production soon led to oversupplies, & gas prices plunged to a 10-year low in 2012, forcing companies to
write-down the value of some of their assets. Companies were also hurt
when some fields thought to be rich in oil proved to contain less than
anticipated.

Intel stock, a Dow company, rallied after 2 analysts predicted the
computer chip maker will snap out of its recent sales slump next year as
more businesses buy desktop & laptop machines powered by its
processors. They predict revenue
will rise 5% next year. Although modest,
it would reverse 2 consecutive years of declining revenue. The slump has been driven by a shift away from PCs
to smartphones & tablets that largely
rely on other types of chips. Their thinking is based on the assumption that many
companies & gov agencies will buy new PCs to replace
machines currently running on Windows XP by early next year because Microsoft (MSFT), another Dow company, plans to stop providing technical support to Windows
XP in Apr, more than 12 years after XP was released. That will provide a prod to buy or upgrade to PCs
able to run on Windows 7 & Windows 8. 150M-250M PCs could be upgraded. After a slow start, INTC also has been making modest inroads in the
tablet market with a chip called "Bay Trail." By next year, Trail could give INTC a 10-15% share of the
tablet market (24M- 36M
devices). Revenue next year is projected to rise
to $54.2M from the forecast of $52.9BN for this year. The price target for the stock was raised to $22 from $20. But there are serious reservations about INTC
prospects, because the "near-term positives are offset by
longer-term negatives." PC sales are likely to remain lackluster as
mobile devices become even more popular & INTC
struggles to make a bigger dent in the tablet market. The stock rose 37¢, taking it above the target price.

Intel (INTC)

Photo: Bloomberg

A Cairo court ordered ousted
President Mubrarak freed from prison, a move that could
complicate Egypt’s increasingly violent political transition,
while militants in Sinai killed 26 policemen. The Cairo criminal court’s order to free Mubarak threatens
to inject new tensions in a nation convulsed by unrest that has
killed almost 1000 in 6 days. His potential release
may spur arguments by the Muslim Brotherhood & others locked
in a standoff with the gov that the military-installed
leaders want to restore the kind of police state Mubarak led. The military removed Brotherhood-backed President Mursi on Jul 3 following days of rallies against him, a move
that has sparked near-daily protests by his backers that have
frequently boiled over into deadly clashes. The tumult has made
it even more difficult for Egypt to emerge from the slowdown
that has battered the economy since Mubarak was toppled. Mursi has been in military custody since his removal. He
was ordered held today for 15 more days pending a probe into new
claims he incited violence during deadly unrest in Dec. Mubarak, ordered freed in connection with a corruption
case, could be released within 3 days, his attorney said. He has already been ordered released
in connection with 2 other lawsuits for which he has been
jailed, including his role in the deaths of protesters during
the 2011 uprising against him. This complicated situation gets messier by the day.

Stocks are losing ground in an environment where nothing seems to be going right. Maybe nothing is going wrong in a major way, but stocks are drifting lower on a lack of conviction by the bulls. The big integrated oils were down 1% today, not a good sign for the market. At the same time, yield sensitive stocks keep selling off. Aug is shaping up as an ugly month after Dow gained more than 5K in just 2 years. Dow is already down 650 since the Aug 2 peak.

I just got word from one of my friends at MarketClub, that for a very
limited time, they’re opening up their premium service for a no-cost, 2
week trial! Like many of you, I’m a huge fan of INO, and from what I have seen so far, their service Marketclub! This isn’t a stripped down version, everything in MarketClub is
available to you. I don’t want to give everything away, but you’ll have
unlimited access to my favorite three tools: Trade Triangles, Smart
Scan, and Alerts! The best part is that the MarketClub customer support team will be providing UNLIMITED support!
You can call or email for an instant response to any question, comment or concern.